- If you want to incur small losses relative to your trading equity, then trade small;
- If you want to incur big losses relative to your trading equity, then trade big;
- Losses are inevitable, therefore to avoid big drawdowns, and possibly blowing up your account, trade small;
- Risking a small amount on each trade allows you to have an 'emotional indifference' to each position, thereby allowing you to follow your rules;
- Having such a mindset allows you to accept small losses as a cost of doing business, and avoids you letting them develop into big losses;
- If you want to receive small profits, then use profit targets or oscillators;
- If you want to receive big profits, then do not limit your profits - let them run until price tells you when to exit;
- Price is the one metric you can easily use on any stock, commodity, index or forex pair, or any other instrument that you want to trade.
With trend following, you have limited downside, with unlimited upside. The current performance of my own positions, and the minimal drawdowns incurred, reflect this. Refer to this post for more.
To learn more, pick up a copy of my e-book, or look at the 1-2-1 training or mentoring options.